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Corporate Governance

Compliance with Leading Practices on Corporate Governance

 

FPH first adopted a Manual on Corporate Governance (the “Manual”) last January 1, 2003. Pursuant to SEC Memorandum Circular No. 19 Series of 2016 mandating a new Code of Corporate Governance for Publicly-Listed Companies, a revised Manual was adopted by the Company in 2017. FPH is in substantial compliance on the whole with its Manual and the related issuances of the Securities and Exchange Commission.

FPH continues to abide by all governance regulatory requirements and best practices.  In 2018, most of its directors and officers attended a Corporate Governance Seminar administered by the Institute of Corporate Directors (ICD) while the rest did so with other accredited providers.

Apart from the mandated Manual, FPH has also adopted a Corporate Code of Conduct.  The Code embodies the principles and guidelines for the conduct of the business of the Company and in dealing with its stakeholders.  Further, FPH, through its Board of Directors, annually reviews and updates, as necessary, the vision and mission of FPH, and the group’s corporate strategy and performance objectives, including its implementation  FPH also has in place policies and guidelines on whistleblowing, anti-corruption, related party transactions, conflicts of interest, as well as on trading and disclosure, among others.

FPH’s current board composition serves to insure independent, impartial and fair discussions having four independents, seven non-executive and four executive members. FPH is committed in ensuring that the board composition reflects a diverse mix of experience, skills and background. The board meetings are scheduled at the beginning of the year and are set for every first Thursday of the month. A separate meeting involving non-executive directors is scheduled at the beginning of the year. It had such a meeting on August 8, 2018 and November 8, 2018. The Company conducts annual strategic sessions with management and members of the board. Last year, it had its annual group-wide budget conference. The annual board retreat was also held on October 4, 2018. Both provide an opportunity to review strategies and the possibility of harmonizing common objectives. The Board Risk Oversight Committee also met twice last 2018 to review and assess the strategic risks facing the group.  The company likewise holds a regular Strategies and Synergies Conference for the group’s senior management and officers. For last year, this was held from February 26 to 27, 2018.

The Company has used professional search firms or other external sources of candidates (such as consulting the director databases set up by the ICD) when searching for candidates to the board.  Each director is furnished a director’s kit, which contains, among other things, the relevant PSE Rules, Manual for Corporate Governance, Corporate Code of Conduct and Committee Charters. The Company also encourages directors/commissioners to attend on-going or continuous professional education programs.

Pursuant to the Manual for Corporate Governance, the Board has formed chartered standing committees: a Corporate Governance Committee, a Compensation and Remuneration Committee; an Audit Committee; a Finance and Investment Committee; and a Board Risk Oversight Committee. The Audit Committee acts as the Related Party Transactions (RPT) Committee as well.

FPH also has an Internal Audit Group (“IAG”) composed of Certified Public Accountants (CPA) and Certified Internal Auditors (CIA), among others. The IAG reports to the Board through the Audit Committee, which in turn determines the adequacy of the company’s internal controls and risk management. The IAG provides assurance and consulting functions for FPH and its subsidiaries in the areas of internal control, corporate governance and risk management. It conducts its internal audit activities in accordance with the International Standards for the Professional Practice of Internal Auditing (ISPPIA) under the International Professional Practices Framework (IPPF). There are two board committees overseeing compliance requirements – the Audit Committee and the Board Risk Oversight Committee apart from the general oversight exercised by the Board and senior management.

It bears mention that the Audit and Board Risk Oversight Committees are chaired by independent directors, and that a majority of the members are qualified non-executive directors. FPH will continue to have four (4) independent directors over and above the legal requirement for three (3) such directors. It has appointed a Lead Independent Director in the person of Chief Justice Artemio V. Panganiban. FPH has also appointed Mr. Renato A. Castillo as Chief Risk Officer in connection with the Board Risk Oversight Committee and the Risk Management Group’s functions. Mr. Castillo is in charge of the FPH group’s risk management concerns.  A Compliance Officer with the rank of Senior Vice President, Mr. Victor Emmanuel B. Santos, Jr. has been appointed.

FPH has always sought to keep communications open with its stockholders and encourages them to participate in the meeting of shareholders either in person or by proxy.  Shareholders are free to write to the Corporate Governance Committee should they have recommendations and/or nominations for board directorship. FPH undertakes specific activities to listen and learn from stakeholders regarding their requirements, needs and changing expectations. FPH takes the effort to meet its stakeholders, directly or through its affiliates, and communicates person-to-person with shareholders through one-on-one meetings, investors’ conferences, annual stockholders’ meetings, disclosures and press releases.

In 2018, FPH began the implementation of Sustainability Policies for Responsible Asset Protection, Human Rights, Gender Equality and Diversity, and Cultural Heritage and Indigenous Peoples.

As required by the SEC, FPH submitted its Integrated Annual Corporate Governance Report last May 2018.

FPH likewise implements corporate excellence initiatives both at the parent and subsidiary levels such as the Lopez Achievement Awards (LAA) and the Unsung Hero Awards. The LAA aims to recognize and reward outstanding team or individual achievements that are exemplary in nature, contribute to business objectives and exemplify the Lopez Values.  FPH had the inaugural issue of its Corporate Sustainability Report for 2016. Last November 2017, it was recognized by the Exchange with the Bell Award for Excellence in Corporate Governance with respect to having the Best Sustainability Program.